The Reserve Bank of New Zealand has again increased its official cash rate by 25 basis points to 2.75%. This comes again after a same hike in the last July meeting. RBNZ has mentioned that inflation has risen significantly to 4.1% in the recent June quarter. They have attributed this rise to the higher fuel prices caused by the US-Iran conflict in the Middle East (especially in the Strait of Hormuz). The Crude Oil Price was around 60 USD per barrel around the start of 2026 while currently its trading with high volatility around 90 USD per barrel. In the June quarter, the core inflation measure (which excludes the volatile fuel prices) stood at around 2.9% which was also near RBNZ’s upper edge of target inflation range of inflation between 1% and 3% over the medium term, while it focuses on keeping future inflation near the 2% midpoint.
Before the July meeting, the OCR was on hold at 2.25% since November last year where their unemployment rate had increased to 5.3%. On Wednesday 26 November last year, the Monetary Policy Committee agreed to reduce the Official Cash Rate to 2.25% and noted that their Inflation was still at the top of their target range but will decline next year. Data from Stats NZ shows the CPI was around 2.2% in September 2025.
The Central Bank expects unemployment rate to fall due to it’s focus on returning inflation back to the target which might support economic growth. In overall, the bank expects a broaden economic growth and increase in exports going forward. It also mentioned that the average house growth in South Island has exceeded the growth rate of North Island especially Auckland and Wellington.
Speaking at the press conference, RBNZ Governor Dr. Anna Breman described that lifting the OCR now was done to move the rate upwards to a neutral level from a low and accomodative level and this will help in bringing inflation down while contributing to economic growth too.
Sources:
Inflation – Reserve Bank of New Zealand – Te PÅ«tea Matua
Crude Oil – Price – Chart – Historical Data – News
OCR increased by 25 basis points to 2.75% – Reserve Bank of New Zealand – Te PÅ«tea Matua
